The sudden May 6, 2010 U.S. market collapse and rapid partial rebound is known as the Flash Crash.
During the afternoon, major U.S. equity indexes fell sharply in minutes before recovering much of the loss. The Dow Jones Industrial Average briefly lost nearly 1,000 points, and many individual securities traded at extremely unusual prices. The event demonstrated how quickly modern electronic markets could move when liquidity disappeared.
Investigations by U.S. regulators found that a large automated sell order in E-mini S&P 500 futures interacted with high-frequency trading and other algorithmic activity. The exact market dynamics were complex, but the episode showed that a single strategy could contribute to a feedback loop of selling and rapidly changing quotes.
The Flash Crash was not a conventional multi-month bear market such as the 1929 or 2008 crashes. It was a short-lived intraday dislocation. Regulators later introduced measures including circuit breakers and rules intended to reduce the chance that clearly erroneous trades would stand.